Germanwings extends its offer in the low-cost segment

With its current fleet of 30 Airbus A319s Germanwings offers flights from its five locations, Cologne/Bonn, Stuttgart, Berlin-Schönefeld, Hanover and Dortmund, to 75 European destinations. To strengthen its long-term competitiveness, the company stationed three aircraft at Hanover-Langenhagen airport in April 2010 and expanded this site as a new base. In the main travel season Germanwings flies non-stop to 14 European destinations from Hanover. By transferring at Stuttgart passengers were able to reach a further 13 destinations from here.

In 2010 Germanwings sparked a new industry trend with the introduction of a new pricing structure in Germany. Travellers have the option of choosing between three different rates: Basic, Best or Flex. The new Best fare offers passengers a clear price advantage and enables them to combine a number of additional services into a single package. For customers this combination is advantageous, as the additional services are 25 per cent cheaper than if the individual components were booked separately.

Furthermore, Germanwings is constantly increasing its attractiveness to passengers. Since 1 September 2010 Miles & More members have been able to collect miles for the Miles & More programme on all Germanwings flights. The same number of miles will apply here as for Lufthansa flights. Since December 2009 Miles & More participants have also been able to redeem their miles for flights on the entire Germanwings route network.

Germanwings received several awards also in 2010. The company was voted Germany’s most productive airline by Profiles International. In the current Flugatlas survey organised by Mobil in Deutschland e.V., Germanwings won the test with top marks in the categories punctuality, frequent flyer programme, price and ease of booking.

Result under pressure from non-recurring factors

Inner-European flight traffic remains dogged by stiff competition and low average yields. In this environment the operating result for Germanwings in the first half of 2010 received another blow from exogenous effects such as the pilots’ strike and the temporary airspace closures. Start-up costs were also incurred at the station in Hanover-Langenhagen. In December the treacherous winter weather landed another punch. In this market environment it was not possible to sell capacities in full. The measures taken to safeguard earnings were not able to offset the one-off effects at the end of the year.

Despite of the one-off factors described, Germanwings was able to continue on its growth path. Germanwings saw an increase of 7.9 per cent in passenger numbers to 7.7 million in 2010. At 77.2 per cent, the passenger load factor nearly matched the previous year’s high level. Revenue rose to EUR 630m (+8.6 per cent). Overall, however, for the financial year 2010 Germanwings reported an operating result of EUR –39m (previous year: EUR +24m) influenced by the one-off effects.

New sales cooperation and earnings improvement in 2011

For 2011 Germanwings is expecting pressure on demand and earnings to remain high due to the government’s new air traffic tax, persistent overcapacities and the resurgent oil price.

In order to stabilise average yields and demand, Germanwings will continue to expand its sales structures in the year ahead. Fares for Germanwings and Lufthansa can be combined as of 2011 and the two airlines will work together even more closely in the corporate customer business. This will enable customers to benefit from a joint product range in future. In the future Germanwings can also be booked via all global distribution systems. Germanwings has launched the WIN4U programme to safeguard earnings, which covers cost savings as well as structural cost-cutting measures such as strategic collaboration with Lufthansa Technik. Revenue and operating result for the financial year 2011 are thus expected to be higher than last year.

Alongside this permanent earnings improvement, Germanwings is continuing to invest in its product; in new high-quality seats, for instance, in order to make it even more comfortable on board and to offer customers an improved seating configuration. The fleet, too, is to see further development. Eight new Airbus A319s will be added successively to the existing fleet between 2012 and 2014.